Consumer 6: Saving for the Future is the Key
Friday, August 18th 2000, 12:00 am
By: News On 6
With their children returning to school, many parents may be thinking ahead to the day when their child goes to college. Costs are increasing every year, so the time to start saving is now. Saving involves much more than putting money in a regular savings account. There are several options available to help you put some money away.
As Americans, we spend way more than we make. Financial planners say people need to find a way to reverse that trend. "What you need to do is sit down, make a plan, and know know your goal,â€ said Brandy Barnes of Smith Salomon Barney. â€œAre you saving for a house? Saving for retirement? Or are you saving for your child's education?"
Children can be a big motivator for saving, but experts say you should first make a plan for your own retirement and then start saving for college tuition. "The first thing I would do is look at your employer,â€ Barnes added. â€œDoes your employer have a 401-K plan? If he does definitely, start there." She suggests investing the maximum amount allowed from your paycheck. It comes out of your gross salary, so you can save on taxes.
If a 401-K is not an option, an Individual Retirement Account or I-R-A can be another option. There are two types of I-R-As, traditional and a Roth. "A traditional I-R-A sometimes has a pre-tax advantage,â€ Barnes explained. â€œYou're putting pre-tax money in there and you might get a deduction on your tax form. A Roth I-R-A is after tax money,â€ she noted. â€œYou are not going to get any type of tax advantage, but you will be able to pull out contributions that you've made without being penalized." Both of these I-R-As could help your money grow.
You can find out more about saving and investing by checking out books and magazines at your local library, talking to a banker, a broker or a financial planner. A little research can help you make the best plan, so you and your family be financially secure in the future.